JSE hits high note as Fed leaves easy money tap open

STOCKS surged to new record highs yesterday in line with global peers after the US Federal Reserve stunned markets by delaying a pullback in its stimulus programme.

The blue chip Top40 index added 2.24 percent to a record close high of 39 701.11 points. The broader all share index ended 2.15 percent higher at 44 302.94, also its highest close.

Gold producers such as AngloGold Ashanti led the local charge as bullion’s price leapt over 4 percent on the Fed move, seen as a positive for the precious metal, as its status as an inflation hedge is enhanced by the flow of easy money.

The gold mining index rallied 7.09 percent to its highest close in 10 days, but it remains about 45 percent down on the year, not least because bullion’s price had been steadily falling as concerns mounted that the Fed would scale back its asset purchases.

“If the Fed had wound down, that would have also been good for markets because it would have signalled confidence in the US economy,” Sasha Naryshkine, an analyst at private wealth manager Vestact, said.

“Having said

that,

the expected yesterday and kept its forecasts for 2013 economic growth and inflation unchanged, but warned about the impact of labour strikes, underscoring the fragility of domestic fundamentals in the economy.

Leaving rates at 40-year lows, the bank said the growth outlook had not changed and kept its gross domestic product forecast at 2 percent, and at 3.3 percent and 3.6 percent for 2014 and 2015 respectively.

Turnover was brisk, with 299 million shares changing hands compared with 167 million on Wednesday, according to preliminary bourse data.